Shopping for GWACs

By John Moore

Jul 07, 2003

When officials at the Next-Generation Weather Radar (Nexrad) Radar Operations Center decided to look for a contract vehicle, they had an extensive shopping list.

For starters, the center, which maintains the nation's Doppler weather radar, sought a buying vehicle with sufficient breadth and flexibility. The base workload would cover everything from office automation support to radar engineering services.

"Name any kind of discipline and we probably have it," said Richard Vogt, acting director of the operations center, located in Norman, Okla.

In addition to handling day-to-day chores, the winning contractor would deal with special projects lasting 12 to 18 months. The center also sought the ability to work with small-business contractors and a reasonable administrative fee structure.

Vogt said the center had considered conducting its own services procurement or tapping

various General Services Administration vehicles. But then the agency became aware of the Commerce Department's Commerce Information Technology Solutions (COMMITS), a governmentwide acquisition contract. The center, itself part of Commerce's National Oceanic and Atmospheric Administration, determined that COMMITS "met or exceeded our criteria for evaluating other vehicles," Vogt said.

According to Vogt, COMMITS was structured to provide a range of services and handle special project tasking. The contract's small, disadvantaged business orientation met the center's objectives. In addition, the program offered to place a contracting officer's technical representative on-site, a key consideration given the radar center's remote location and the task order's size. Finally, COMMITS' administrative fee was lower than those for other vehicles the center considered.

In 2000, the center placed one of the first task orders under the then-new procurement, a $22 million deal.

The radar center's experience demonstrates what agencies evaluate when selecting a GWAC. But other factors such as flexibility, ease of use, and training and support availability also play a role. And, all things being equal, a program's administrative fee might tip the balance in favor of one contract over another.

Faces in the Crowd

In the post-procurement reform era, agencies have launched numerous GWACs, which have become popular contracting vehicles. With Congress' blessing, the Office of Management and Budget has given agencies the executive agent authority to establish GWACs.

So far, OMB has designated four agencies as executive agents for GWACs: Commerce, GSA, NASA and the National Institutes of Health. Together, those agencies operate more than a dozen contracts. They include Commerce's COMMITS, NASA's Scientific and Engineering Workstation Procurement (SEWP) III, and a trio of NIH vehicles: Chief Information Officer Solutions and Partners, Electronic Commodity Store (ECS) III, and ImageWorld 2. GSA, meanwhile, runs the Millennia Lite and Seat Management Services contracts, among others.

Other agencies operate vehicles that are sometimes lumped together with GWACs, but actually represent another contracting category. Multiagency contracts (MACs) are similar to GWACs in intent. The main difference is that MACs are subject to the Economy Act, while GWACs are exempt. That's significant, because the Economy Act requires the ordering agency to generate paperwork not required under GWACs.

The sizable field of GWACs and GWAC-like contracts provides no shortage of options for agency buyers. The trend among GWACs is to offer a sufficiently broad array of products and/or services, while maintaining a focus that provides differentiation in a crowded market.

NIH, for example, expanded its ECS III vehicle to offer services in addition to products.

"Contracts are broader in scope," said Tom Flynn, director of partners and programs at PlanetGov Inc., which has a prime contract on ECS III. "In the past, it was very frustrating to architect a solution for a customer when you can only do hardware and maintenance support, but not services." On previous ECS pacts, a customer may have been forced to buy products through the NIH program and services through the GSA schedule.

But focus is also important for GWACs that hope to stand out from the crowd. NIH, for example, has promoted ECS III as the vehicle for homeland security-related IT. And although the 66 prime contractors cover a lot of technology ground, a number also offer security and biometric products.

"The products [NIH officials] want to feature are those that could be positioned as approaches to homeland security," said Les Rosenthal, sales and operations vice president at NetStar-1, an ECS III contractor. NIH has taken its security message to industry conferences such as the Army Small Computer Program's, he adds, noting that this marketing approach has helped reinforce the homeland security angle.

The long-established SEWP program, meanwhile, concentrates on "high-end IT hardware and software products and maintenance of those products," said Joanne Woytek, SEWP's program manager. The latest vehicle, SEWP III, offers services, but is deliberate in doing so.

"We do not provide support services contracts and, in fact, limit such services to those connected directly with a product purchase and only allow a small percentage of an order to include services," Woytek said. She said this philosophy enables agencies to buy a complex IT solution with "enough assistance in setting up those products...to ensure they can utilize" them.

Luring Buyers

Although a specific focus may help lure buyers, GWAC supporters also point to ease of use as a factor. One aspect of user-friendliness is rapid technology refreshment. Agencies that need solutions not currently available on a given contract may not have weeks or months to wait out a traditional engineering change proposal (ECP) cycle.

Flynn said the ECP process, in which a proposed product addition is subjected to technical and pricing reviews, may take up to 90 days. Some vehicles, however, are dumping ECPs for a technology refreshment process that is "flexible and easy to use so you can keep up with next-generation products and technologies," Flynn said.

Contractor executives point to such GWACs as ECS III and SEWP III as having fast technology refreshment. Woytek credited a "highly automated technology refreshment process [that] checks for basic compliance, including pricing." This process generates a report that technical and contract personnel review. Woytek adds that technology refreshment requests are typically reviewed and approved — or disapproved — in one to two business days.

Indeed, GWACs' reputation for quick turnaround has fueled their popularity among agency buyers. "If they need to get something done particularly quickly and know their own vehicles will take longer, they will [have an incentive] to look at other contract vehicles," said Kathy Conrad, a vice president with Jefferson Consulting Group, a federal IT acquisition specialist.

In general, customers are drawn to vehicles that cause the fewest headaches in buying products and services. "One of the things that's important to customers is the aggravation factor," said Robert Williams, co-president of A&T Systems Inc.

Ease of use aside, other factors make a given contract attractive. Training and other customer support services have become a point of differentiation among GWACs. Woytek said she believes SEWP's main strength "lies in its customer service with outreach programs, including tutorials, conferences, retreats, one-on-one procurement meetings and training sessions."

Vogt said his organization took advantage of the training offered through COMMITS, which embraces performance-based contracting. The Nexrad Radar Operations Center's staff was unfamiliar with this contracting method, as were some contractor personnel, he noted. "That was a new experience for us," Vogt said of performance-based contracting. COMMITS delivered the training in Norman, providing guidance on such performance-based practices as statements of objectives and award fees.

"We've been through the award-fee cycle three or four times and we continually tweak it, but it's worked out very well," Vogt said. "The training was the key."

When COMMITS was launched in 1999, the vocabulary of performance-based contracting "was foreign terminology to most people," said Tina Burnette, COMMITS' program manager. Although she noted that customers are becoming more sophisticated, the program continues to offer performance-based contracting support and training to both customers and vendor partners.

The program provides supplemental expertise through contractors such as Acquisition Solutions Inc. and Jefferson Consulting Group.

Scott Amey, chief operating officer at RS Information Systems Inc., said performance-based contracting helps focus on customers' key needs and provides ways to measure results. The company has about five performance-based task order customers under COMMITS, including the Nexrad Radar Operations Center.

Fee for Service

On GWACs, buyers pay to use another agency's contract. GWAC programs charge users a certain percentage of an order to cover the contract administration's cost. Differences in fee structure may influence buying decisions, particularly on large orders.

"If you think about doing a multimillion-dollar deal, a 1 percent to [0.75 percent] difference is pretty sizable," Flynn said. GWAC contracting shops are sharpening their pencils, he added.

The SEWP program office lowered its fee to 0.6 percent in February. GSA plans to reduce its industrial funding fee for its schedule program to 0.75 percent from 1 percent in January 2004. Schedule vendors pay the fee, but the charge is reflected in the prices of goods and services sold on the schedule.

Competitive pressure has influenced the moves, but so too has congressional inquiry. The General Accounting Office last July reported that "some GWAC programs have not identified or accurately reported the full cost of providing interagency services." The report questioned whether the fees accurately reflect the cost of running contracts. The GSA schedules program, for example, generated fee revenues that exceeded costs by more than 53 percent during a three-year period, according to GAO.

Howard Stern, senior vice president of Federal Sources Inc., said GSA was influenced both by the GAO audit and competing vehicles. "Some of the other GWACs were a little more cost-effective," he said.

As for SEWP, Woytek said the program's surcharge fee has always been "based strictly on providing enough income to support the contract program office." The 0.6 percent fee applies to orders of $2,500 and above. The fee is capped at $5,000 for orders in excess of $833,333, and no fees are assessed on orders less than $2,500.

On COMMITS, fees are negotiated on a case-by-case basis and set according to the level of contracting support the customer needs. The Nexrad Radar Operations Center's fee, for example, included the on-site contracting officer's technical representative. But paying for the additional support helped the center avoid other costs. "Previously...it cost us a [full-time equivalent position] to manage the contract," Vogt said.

That's typical of the trade-offs buyers consider when evaluating GWACs. Ultimately, the customer must judge how effectively a vehicle has juggled availability, value-added services and usage fees.

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